Consumer sentiment improves in Sept.

WASHINGTON (MarketWatch) -- U.S. consumer sentiment improved slightly in September, but remained near its lowest level this year, according to a monthly survey released Friday by Reuters and the University of Michigan.

The preliminary September reading of the UMich consumer sentiment index rose to 83.8 from 83.4 in August.

Sentiment dropped sharply in August due to the turmoil in the mortgage markets and the stock market. Equity markets were still weak n September, while gas prices ease somewhat.

Economists were expecting the index to be relatively steady at about 83.5, according to a survey conducted by MarketWatch. See Economic Calendar.

Inflation expectations inched lower. The one-year inflation expectation fell to 3.1% in September from 3.2% in August.

The UMich survey is one of several sources used by Fed officials to gauge inflation expectations.

The expectation index rose to 74.4 in September from 73.7 in the previous month.

The current conditions index inched lower to 98.3 from 98.4 in August.

In other reports released Friday, the Commerce Department said retail sales rose 0.3% in August. See full story.

Industrial output rose 0.2% in August, while factory output fell for the first time since February. See full story.

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